Diokno cites benefits of REIT investments

MANILA, Philippines — Promoting real estate investment trust (REIT) offerings in the Philippines is expected to expedite financial inclusion and contribute to economic growth, according to the Department of Finance (DOF).

Finance Secretary Benjamin Diokno is urging the private sector to tap more REIT offerings involving a wider variety of assets, especially from renewable energy sources in a bid to revitalize the economy.

“REIT offerings are supportive of the government’s push for financial inclusion as these allow everyday Filipinos to participate in profitable and secure investment opportunities in real estate without having to manage properties,” Diokno said.

“In fact, individual investors comprise a vast majority of total REIT investors at 98 percent, demonstrating REIT’s potential to be a major driver of financial inclusion,” he said.

A REIT is a stock corporation that allows the public to invest and trade in income-generating real estate assets.

It is a type of investment instrument that provides returns derived from rental income of the underlying real estate asset, which are distributed to the investors in the form of dividends.

As of end-July, a total of P93.3 billion of capital funds have been raised from eight REIT offerings while total market capitalization amounted to P228.5 billion.

REIT investors have also grown by 38 percent to reach over 160,000 last year.

“REITs are ideal tools for boosting investments to power property development in the country and for diversifying investor portfolios,” Diokno said.

“I am confident that REIT investments will continue to fuel economic recovery and drive infrastructure modernization, create more business opportunities, and invigorate the Philippine capital market,” he said.

To take advantage of the sector, the government is pushing for the passage of the Real Property Valuation and Assessment Reform Act which is currently pending in the Senate.

The reform aims to adopt internationally accepted standards and use digital tools to govern real property valuation in the Philippines.

The measure will also empower local government units by enhancing their capacity to generate local revenues from real property.

It was in 2020 when the Philippines witnessed its first REIT listing after the Securities and Exchange Commission and Bureau of Internal Revenue relaxed the ownership requirements and tax treatment of REITs and introduced amendments to the implementing rules and regulations.